Austral Resources Raises $40M to Reboot Rocklands Copper Project
Austral Resources Australia Ltd has launched a $40 million placement at 5 cents per share to fund the acquisition and recommissioning of the Rocklands copper project in Queensland. The offer includes share and option issues tied to debt conversions and is conditional on shareholder approval and ASX reinstatement.
- Placement offer of 800 million shares at 5 cents to raise $40 million
- Acquisition of Rocklands Project via DOCA with Dragon Field International Limited
- Debt conversions to Thiess and AES through share issuances
- JORC-compliant Mineral Resource of 12.42 Mt at 0.68% copper, no Ore Reserves
- Two-year work program planned for resource drilling, metallurgical testing, and infrastructure refurbishment
Capital Raising and Acquisition Strategy
Austral Resources Australia Ltd (ASX – AR1) has announced a significant capital raising initiative aimed at recapitalising the company and funding the acquisition and recommissioning of the Rocklands copper project in Queensland. The company is offering 800 million new shares at an issue price of 5 cents each, targeting sophisticated and exempt investors to raise $40 million before costs.
This placement is part of a broader transaction that includes issuing 168.2 million new shares and up to 21 million new options to Dragon Field International Limited (DFIL) as part of the acquisition of Copper Resources Australia Pty Ltd (CRA), the owner of the Rocklands Project. Additionally, Austral plans to convert outstanding debts owed to Thiess and AES into shares, further strengthening its balance sheet.
Rocklands Project Overview and Technical Assessment
The Rocklands Project is a strategically important asset located approximately 15 km northwest of Cloncurry in North-West Queensland. It comprises three mining leases and one exploration permit covering about 29 square kilometers. The project includes an open-pit copper-gold mine, a flotation processing plant with a 3 Mtpa capacity, and associated infrastructure such as a tailings storage facility and power station.
An independent technical specialist report by Derisk Geomining Consultants confirms a JORC-compliant Mineral Resource of 12.42 million tonnes at 0.68% copper, containing approximately 84,000 tonnes of copper metal. The resource includes in situ and stockpiled mineralisation but notably does not include Ore Reserves, reflecting operational challenges and the need for further technical studies.
Operational difficulties experienced by CRA, including staff shortages due to COVID-19 and crusher circuit issues, led to the project being placed into care and maintenance in late 2024. Austral plans a two-year work program with a $13 million budget allocated to resource drilling, metallurgical testing, and refurbishment of key infrastructure such as the crusher and power station.
Financial Position and ASX Reinstatement
The capital raising proceeds, combined with a $20 million loan facility from Glencore, will fund the acquisition of CRA and support the recommissioning of the Rocklands Project. Austral’s pro forma financial statements indicate a strengthened balance sheet post-transaction, with improved working capital to support operations for at least 12 months.
The company’s shares have been suspended from trading on the ASX since September 2023. Reinstatement is contingent on satisfying ASX’s conditions, including shareholder approval of the placement and related offers, and an extension of the ASX’s two-year suspension limit. Austral has convened an extraordinary general meeting to seek the necessary approvals.
Risks and Opportunities
Investors should consider the speculative nature of the investment. Key risks include the absence of Ore Reserves, operational challenges at Rocklands, potential delays in ASX reinstatement, and market price volatility for copper. The independent technical report highlights risks such as possible overestimation of resource grades and metallurgical uncertainties related to native copper processing.
Conversely, opportunities exist to expand Mineral Resources through exploration, improve processing recoveries, and leverage the strategic location of Rocklands to integrate with Austral’s existing operations. The company’s strategy to become a consolidation platform in North-West Queensland could unlock further value.
Bottom Line?
Austral’s $40 million capital raise and Rocklands acquisition mark a pivotal step, but execution risks and ASX reinstatement remain key hurdles.
Questions in the middle?
- Will Austral secure shareholder approval and ASX reinstatement to proceed with the offers?
- How will Austral address operational challenges, particularly crusher performance, at Rocklands?
- What is the timeline and funding strategy for converting Mineral Resources into Ore Reserves?
